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Louisiana Tech University


Policies & Procedures

Policy 5104 - Operating Fund Ledgers

Effective Date: 6/20/2014

Responsible Office: Comptroller's Office


ACCOUNTING LEDGER EXPLANATIONS OPERATING (12’s)

A major financial tool for departments is the monthly ledger report which gives a budget summary and detail transaction ledger.  The monthly ledger consists of

  1. The account number assigned for the budget unit
  2. The account title and distribution address
  3. Dates relating to the information in the report, the month-end summary gives information through the end of the month while the current budget summary reflects information up to the date the report is actually run.  Any transaction in the new month that have been processed will be reflected in these updated totals.
  4. Budget – Current Budget approved for the department.  It reflects any changes in the budget since the budget was first set up
    Open Encumbrances – Current open encumbrances (outstanding purchase orders) for which no cash payment has been made to the voucher.  See also 13  and  14
    YTD Actual Year To Date – Actual expenses recorded by the department which represents cash paid for goods and services
    Balance– Balance of funds remaining in each budget or budget group.  See also  8  and   9  .  This column tells the department what funds are still available to the spent in the current fiscal year.  (Budget less Open Encumbrances less YTD Actual equals Balance).
  5. Percentages – the three management percent figures are shown to assist the Department.
    %A – the percentage of the current fiscal year’s budget expended to date this year  (YTD Actual divided by Budget).
    %B – the percentage of the prior fiscal year’s budget expended to date this year (FYYTD divided by FY Total). A comparison of %A to %B shows the trend or changes in the trend of Expenditures between the current fiscal year and the previous year.
    %C – the percentage of free balance available to be spent (Balance divided by  Budget).
  6. FY 13 TOT– Prior fiscal year total representing the total funds expended by the department  in the previous fiscal year.
  7. FY 13 YTD – Actual funds expended through the current month by the department in the previous fiscal year.  Comparing FY13 YTD and YTD Actual to see the relationship of expenses between the current and previous fiscal years.
  8. GP– Grouped budgets are a control technique that allows line item budget categories to be grouped together for free balance checking (Travel, Operating Services, Supplies and Equipment) have unique line item budgets, but the department expends against the total of these budgets.  This eliminates the need for budget changes and allows departmental flexibility in spending.  Budget groups are identified by the unique GP codes 1, 2, 4, etc… and the # on the right hand side next to the balance column).  
  9.  GP – # designates a grouping.
  10. 07-01-13 BUDG – The department’s original budget that was set at the beginning the  current fiscal year.  It can be compared with  4   to see what budget changes have been made in the current fiscal year.
  11. Monthly Transaction Ledger – Listing of detail transactions (one line per transaction) of  the account for the current month for 12’s, 22’s, and 62’s and year-to-date for 32’s.  Transactions are sequenced by budget category and totaled for each month or group.

    The TC or Transaction Code denotes the type of transaction processed.
     
    Transaction Codes:
    JR – Journal Voucher – Internally prepared accounting entries usually initiated from a department request (memo), a correction or other internal entry as computer services, postal services, etc…
    CR – Check Request – Indicates a check has been written for payment of goods or services 
    PO – Purchase Order – Indicates a purchase order has been issued to a vendor based on a requisition submitted by a department.
    EC – Encumbrance Change – Indicates a charge to an existing purchase order(encumbrance).  Used to increase or decrease  a purchase order and also to process a partial liquidation (payment) of a purchase order where the  amount of the check written to the vendor (CR) differs from the amount to be liquidated on the purchase order.
    PA – Payroll – Indicates a payroll entry based on a payroll check or checks  issued to faculty, staff or students and the related benefit charges. 
    ID –  Interdepartmental – Indicates the processing of interdepartmental charges  based on the processing of a stores requisition from one department on  campus to another, such as Plant Stores, Motor Pool, etc…
    RF – Receipts Form – Represents cash or checks deposited with the  Comptroller’s Office Cashier.  
    IS –  Invoice Statement – represents a billing to an off-campus (non-university)  entity for which an amount is due to be paid Louisiana Tech.  Billings by  Housing, Athletics, etc… for goods and services rendered.

    A brief description accompanies all transactions and the Dept # and the Admin # assist identifying the transaction to the department and the Comptroller’s Office.

    Changes in Actual – Represents actual cash paid out or received (-) in the account. 

    Changes in Free Balance – Represents transactions that increase or decrease (-) the  balance the department can spend.  For example, a PA (payroll entry) results in a change in actual (cash paid out) and a change in free balance.  A BA (budget adjustment) will not affect charges in actual (cash paid out) but will affect changes in free balance as the department’s budget is increased or decreased.  A CR (check request) paying a purchase order (encumbrance) will show a change in actual of the amount paid and no change in free balance if the payment is exactly for the amount encumbered; however, payment for a larger or smaller amount will also decrease or increase free balance. 

  12. X and U X represents a complete liquidation and payment of an outstanding purchase order.  This is the final closing of an open purchase order. Results from a complete receiving report or purchase order cancellation. U represents a partial liquidation and partial payment of an outstanding purchase order.  It may also represent a change order increasing or decreasing a purchase order amount. 
  13. and   14   Open Encumbrances – This is a detailed listing of all open (unpaid merchandise not received) purchase orders.  This report should be reviewed by the department to assure that purchase orders do not remain open for an excessive amount of time.  The report shows the original amount of the purchase order and the current amount open and unpaid.

OTHER:

All coding should be done carefully to insure that the proper department is charged and the proper expenditure code is used.  Anyone initiating a charge of any kind or making a deposit should have access to the Income Codes and  Expense Codes furnished by the Comptroller’s Office.

For regular orders, invoices should be promptly forwarded to the Comptroller’s  Office, receiving reports completed as soon as possible and all other documents  processed in the most accurate and expedient manner to assure that discounts can be taken and that your orders are efficiently and accurately paid.  Discounts are a direct benefit to your department as we are able to pay a lower price for the goods.  If the 1% to 2% discount allowed by many vendors is not taken, a quite sizable dollar loss can result over a year’s  time to the department and to the University.

Each year money is lost because some departments do not keep track of outstanding orders.  The list of outstanding orders should be checked each month to assure that:

          1. Items received are paid for. 
          2. Items not to be received are cancelled; the department can then use the money for something else.


Operating Fund Ledgers Sample (pdf format)


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